Lloyd’s Plan Gets Qualified Support : Insurance: Investors at annual meeting were looking for assurances of fairness in new settlement proposal.
Backers of Lloyd’s of London gave qualified support at their annual meeting Tuesday to the latest plans to solve the insurance market’s problems, but they continued to press management over past losses.
Lloyd’s last week announced its fifth annual loss in a row, taking the total deficit for the past five years beyond $12.8 billion and posing serious short-term difficulties for the 300-year-old market. Also announced last week was a proposed $4.47-billion settlement that would resolve litigation brought by the backers, or Names, who blame Lloyd’s mismanagement for losses that have bankrupted many of them.
But with a return to profit in sight for next year and hopes of an end to litigation surrounding the market, Chairman David Rowland delivered a more upbeat assessment this week than in previous years. He even won a round of applause from the meeting of about 1,650 Names. During 2 1/2 hours of discussion, the Names offered a qualified welcome to compensation proposals, pending talks this summer to hash out the details.
Names are hoping management reform and the settlement plan will put a cap on their losses and finally give them a way out of the insurance market. The proposed settlement so far lacks detail, and the Names wanted clarification and assurances that the plan would be fair to all, including those who have paid all they can.
Rowland said the plan is deliberately not well defined in order to allow for discussion with members to find a consensus for a way forward.
The criticism of Lloyd’s was relatively muted at this year’s meeting. Rowland’s efforts to focus on the future notwithstanding, the Names continued to bring up past problems. In particular, they sought an answer to the question of whether Lloyd’s insiders knew in the early 1980s the scope of asbestosis claims from U.S. liability insurance that would be likely to hit the market in later years.
Sir Alan Hardcastle, chairman of Lloyd’s regulatory board, told the meeting that lawyers are now considering fresh evidence Names have supplied about asbestosis.
“We have a great deal to do, but I believe there is a very good chance of getting to the other side by spring, 1996, if we seek the widest possible consensus,” Rowland told the meeting.
He said Names will be consulted on the details of the settlement proposal outlined last week and will get a chance to vote on the final proposals in the fall, before they are implemented next year.
But Rowland also repeated a warning given with last week’s results announcement: that rejection of the settlement would probably spell the end of Lloyd’s.
That would be a substantially worse outcome for the Names, whose interests in a liquidation would come behind those of policyholders, Rowland said.
Most Names at the meeting appeared to accept Rowland’s contention that the future of Lloyd’s depends on passage of the restructuring proposal.
Sir David Berriman, chairman of the influential Assn. of Lloyd’s Names, told the meeting that he supports the compensation deal. “I’m convinced that we are in the Last Chance Saloon, and, unless we get this settlement, Lloyd’s will go into runoff.”
Lloyd’s can trace its problems to a series of insurance catastrophes in the late 1980s and early ‘90s. It also faces mounting claims from employers’ liability and pollution policies in the United States.
